US Army Corps of Engineers
U.S. Army Engineering and Support Center

Utility rate intervention can save Army installations money

Huntsville Center Public Affairs Office
Published July 1, 2013
Huntsville Center’s Commercial Utilities Program provides services for the oversite of utilities consumed at garrisons and other land-holding facilities.

Huntsville Center’s Commercial Utilities Program provides services for the oversite of utilities consumed at garrisons and other land-holding facilities.

Wouldn’t it be great if there was someone you could call if the utility company was trying to raise the cost for energy? If you’re an Army garrison, there is.

The U.S. Army Engineering and Support Center, Huntsville’s Commercial Utilities Program (CUP) is staffed with two public utility specialists who can provide a utility rate intervention and help negotiate a lower utility cost for you.

“In 2012, the Army paid approximately $1.3 billion for utilities consumed at garrisons and other land-holding facilities, Army wide,” said Bernard Givan, the assistant deputy Army power procurement officer. “The Commercial Utilities Program could save the Army millions per year.”

CUP can assist and ensure installations are paying the best utility rates and review utility bills to ensure that utility companies are charging properly, installations are being reimbursed by tenant organizations, taking advantage demand side management options, maximizing peak reductions, etc.

CUP provides the following services and benefits to installations:

1. Utility Rate Intervention – CUP provides technical support to U.S. Army Legal Services and manages utility consultants that provide expert witness testimony before utility regulatory bodies in opposition to rate increase petitions filed by regulated utility companies. CUP can negotiate with unregulated utilities for the best rates available to the installation. The benefits are significant cost avoidance and savings that can be as great as $7 - $8 million annually Army wide.

2. Installation Utility Management Evaluations – CUP assists and trains installation personnel to review utility billings to ensure billings are accurate, use the appropriate rate, exclude taxes for which the Army is exempt and includes any credits, e.g., for power outages. CUP also assists and trains installation personnel to calculate fair and equitable rates for utility consumption by reimbursable tenants. These benefits include tangible savings, cost avoidance and increased funding from non-Army tenants.

3. Utility Rate Surveys – CUP verifies that an installation is receiving benefit of the lowest rate offered by a utility company and if not, recommends steps to be taken to obtain the lowest rate offered; identify other potential utility cost savings associated with improved peak demand reduction and load management, e.g., upgrading substations to accept higher voltage service offered for a lower utility rate, etc. Utility rate surveys contribute significantly to the success of rate intervention and installation utility management evaluations and potential benefits are identified.

4. Negotiate Special Rate Contracts – The Installation Management Reform Task Force recently recommended that the Army convert its utility contracts that are now tariff based (existing rate schedule) to special rate contracts. CUP can negotiate a special rate design with the utility company whereby if the installation aggressively manages its energy demand to reduce the utility’s cost of supplying energy then in return can receive the special rate from the utility.

The chief of engineers is the Department of the Army’s power procurement officer and is responsible for administration of the purchase and sale of utility services and for policies, engineering, rates and legal sufficiency in connection with all utility services and contracts in which the Army has a monetary interest.

Unlike other initiatives, CUP doesn’t reduce energy usage, but reduces the overall cost for energy. CUP and the Army Regulatory Law Office have helped the Army achieve cost avoidance in excess of $5 million per year
since FY09, Givan said.

FY12 examples of successful interventions include Fort Riley, Kansas and Fort Leavenworth, Kansas where the utility requested a $650,000 increase in annual revenue. The final decision/settlement was $150,000 which provided an annual cost avoidance of $500,000. Also in FY12, the electric utility servicing Fort Knox, Ky., and Blue Grass Army Depot, Ky., requested an increase of $810,000 per year. The final settlement was $540,000 resulting in an annual cost avoidance of $270,000.

“CUP is a proven dollar saver, which is very important in these times of sequestration,” Givan said. “The annual savings far exceed the cost for running the program. An estimated annual cost of $2 million to proactively run the program has projected savings of between $12 and $24 million per year.”